Yesterday the FOMC made the announcement that they would be holding rates for the remainder of 2023. This announcement is a continuation of the FED policy from previous months as inflation data continues to be more favorable to the overall economic outlook. With inflation down the decision comes as a welcome and expected one to round out 2023.
Mortgage rates are down nearly a full point at 6.95% as of 12/14/23 compared to 7.79% in late October. The stock market has also rallied in these last few months with the DOW up 2,276 points in the same amount of time. With inflation data continuing to remain relatively level the expectation is that rates will continue to fall throughout 2024.
Although this is wishful thinking, it was noted during the FOMC meeting yesterday that the FED’s plan is to reduce the federal funds rate by .75% next year. This would likely be done over 3 separate .25% reductions with the first cut coming closer to the end of Q1 as we enter the spring selling season. This is dependent on inflation staying constant and the FED sticking to their plan to approach a rate cooldown as inflation nears their 2% benchmark.
This is welcome news for many that have been waiting for rates to cool down before making any decisions surrounding buying or selling a home. However, this news isn’t going to be favorable for everyone, especially those that have held out on purchasing with the expectation of a market “Crash”.
Over the last 10+ years I’ve spoken with thousands of home buyers and sellers and have helped hundreds in buying and selling homes. Our team here at Briggs American Homes has helped buyers and sellers generate over $50 Million in wealth from Real Estate Investments. The one thing all our clients have in common is they entered the market and purchased a home. Whether it was a primary residence, investment property, short- or long-term rental, flip, etc., they all did the same thing, bought real estate.
Out of all those thousands of buyers we’ve worked with over the last 10+ years we’ve had just as many tell us they’ll wait for the market to crash to buy. I remember speaking with buyers as way back as 2013 about buying a home and being told they would wait for the “bubble to pop” before they bought their first home. This was back when you could get a really nice starter home in a great school district in the mid $200,000’s. Today, those same homes are going for over $500,000 and you’re lucky if you find a condo in the same price range that doesn’t need to be completely renovated.
I remember these buyers so well because I still speak with them, and they are still renting. They’ve changed jobs 5 times amongst the two of them, had 2 children, moved to 3 different cities and their story is still the same, they’ll wait for the market to crash to buy. In the words of the husband just last week, “it has to come back down at some point”. In the meantime, they’ve missed out on $250,000 in equity gain, spent over $212,000 in rent, and moved 7 times. In this same amount of time, they’ve been able to increase their budget to $315,000 and had to move to different cities away from their families to try and find something more affordable.
I told these potential buyers the same thing that I tell my buyers now, the best day to purchase a home was YESTERDAY. I realize that the 2008 housing crash is still on the minds of millennials. We may not have been old enough to own homes, but our parents were, and we remember how hard it was for so many during those years. I cannot stress enough how drastically different this market is!
There’s a ton of people out there talking about how unsustainable this growth is and how pricing just has to come down at some point. I’ve heard it every week, month, and year that I’ve been in the industry and yet the market has stayed relatively the same. We’ve of course had our peaks and valleys just like any industry, but our swings have been far less severe than a major housing crash.
If you’ve been holding out on purchasing or selling a home due to interest rates, I would highly encourage you consider your options sooner than later. I’ve seen showing traffic increase over 30% in the last 3 weeks and mortgage applications with our preferred lender partners are up nearly 43% in the same amount of time. Listing Average Days on Market (DOM) have fallen from a peak of 32 days down to 8 as listing counts have also fallen to historical lows. The shift is already happening and those who wait out longer will see the market return to a similar market of late 2021 with multiple bids and offers over the asking price.
Do not miss out on years of homeownership and tens of thousands in equity waiting for something that likely won’t come anytime soon.
As always if you need assistance with anything real estate related, or just want to speak to a pro about real estate and how we can help, don’t hesitate to call us directly at 980-250-2795 or email at Matt@briggsamerican.com